US Product Rental and Leasing Sector

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 56,894 product rental and leasing establishments in the US provide the use of commercial and consumer goods in return for lease or rental payments. Establishments may rent or lease nonfinancial intangible assets, including patents and trademarks (but excluding copyrighted works).

Seasonal, Uneven Demand and Cash Flow

Cash flow in the equipment rental/leasing sector is seasonal and driven by the dynamics of downstream industries.

Variability in Residual Value

Firms are exposed to financial risk when the market value of a vehicle or rental good is less than its depreciated value (residual value) when it is sold.

Industry size & Structure

The product rental and leasing services sector is comprised of 56,894 establishments that employ 531,100 workers and generate $186 billion in annual revenue, according to government sources.

    • The product rental and leasing services sector represents 1% of the nation's Gross Domestic Product (GDP) and employs 0.4% of the country's workers.
    • The sector is concentrated with the 20 largest firms representing 48% of revenue.
    • In addition to employer establishments, the product rental and leasing services sector has 83,000 owner-operated establishments with no employees. Subsectors with the highest numbers of nonemployer establishments are commercial and industrial machinery and equipment rental and leasing (42%); automotive equipment rental and leasing (26%); and consumer goods rental (23%). The owners of nonemployer establishments typically perform the work and may outsource support functions like marketing and accounting.
    • The product rental and leasing sector has shed about 4,100 establishments annually, which equals about 8.7% of existing establishments. However, the sector has added about 4,300 new establishments annually, which is equivalent to 8.4% of existing establishments. As a result, the sector has an average loss rate of 0.3%.
    • The product rental and leasing sector is forecast to grow its employment base by 2.5% overall in 2021-2031, which is much lower than the national average of 5.3% for all jobs, according to the Bureau of Labor Statistics.
                                  Industry Forecast
                                  US Product Rental and Leasing Sector Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  May 10, 2024 - Steady but Flat Industry Growth
                                  • The US product rental and leasing sector is expected to experience slower sales growth in 2024 after a softening of demand in 2023. The industry’s year-over-year sales growth fell to 4.8% in 2023 from 14.1% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Industry sales growth is expected to moderate further in 2024 to 2.1%, then notch average annual growth of about 4.5% per year through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
                                  • Equipment rental and leasing firms that serve the agricultural market could see a downturn in demand amid a drop in commodity prices that affects farmers’ buying power, according to Equipment Finance News. US farm commodity prices are forecast to decline 25.5% in 2024 compared to 2023, according to the Department of Agriculture. Some industry insiders suggest that could translate into a 15%-20% decline in farmers’ equipment investments.
                                  • Equipment rental firm United Rentals posted record first-quarter revenue in April. The firm notched Q1 2024 sales of $3.49 billion compared to $3.29 billion in the first quarter of 2023. United Rentals also upwardly revised its full-year revenue guidance to $15.45 billion from $14.95 billion to reflect the March closing of its acquisition of Yak, a provider of protective mats used in the construction and the maintenance, repair, and operations (MRO) markets.
                                  • Automotive fleet sales to the rental market have been choppy the last few months, but so far in 2024, demand has been robust, according to Automotive Fleet magazine. In April, rental fleet sales were 105,261 vehicles, down 2% compared to April 2023. Year-over-year rental fleet sales were essentially flat in March 2024 but skyrocketed 46% in February. For the first four months of 2024, rental fleet sales are up 16% compared to the same period in 2023.
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